InSight

Exit and Growth Strategies for Middle Market Businesses

M&A News In The Plastics and Rubber Industry Sector

By Jim Zipursky | Oct 09, 2017

The report below provides a good overview of the 3rd Quarter M&A activity in the Plastics and Rubber Industry Sector. M&A activity for North American based target companies in the Plastics and Rubber sector for Q2 2017 included 24 closed deals, according to data published by industry data tracker FactSet. The average purchase price was $73million.

The high-performance tire sector has been among the fastest-growing parts of the tire market. According to a recent report from Smithers Rapra, The Future of High-Performance Tires to 2022, the high-performance tire market will grow at 6.3 percent year-on-year through to 2022 reaching a market value of $74.7 billion, up from $54.9 billion in 2017.

Read more »


M&A News in the Metal Fabrication Industry Sector

By Robert Contaldo | Oct 04, 2017

The report below provides a good overview of the 3rd Quarter M&A activity in the Metal Fabrication Industry Sector. M&A activity for North American based target companies in the Metal Fabrication sector for Q2 2017 included 51closed deals, according to data published by industry data tracker FactSet.

One of the more notable transactions in the sector closed in April when Wieland-Werke AG acquired Wolverine Tube, Inc. for an undisclosed amount. The acquisition enhances Wieland-Werke AG’s international market position and also expands its portfolio of technical businesses. Founded in 1916, Wolverine Tube is located in Decatur, Alabama and manufactures copper alloy and copper tube, rod bar and strip products.

Read more »


Latest M&A News From The Industrials Industry Sector

By John Hammett | Sep 26, 2017

The report below gives a good overview of the third quarter M&A activity in the Industrials Industry Sector. M&A activity for North American based target companies in the Industrials sector for Q2 2017 included 116 closed deals, according to data published by industry data tracker FactSet.

One of the largest middle market deals of the quarter was announced in April when A private group led by the Dutil family, Marcel Dutil’s holding company, Placements CMI Inc., and AIP LLC acquired Canam Group, Inc. for CAD557.9 million (US$411.5 million) in cash. Canam Group is located in Saint Georges, Québec, Canada and provides fabricated steel joists and construction components, semi-trailers and forestry equipment. As with the stock market as a whole, the Industrials sector has grown more than 8.2% since the start of 2017. Growth has, in part, been driven by a renewed focus on manufacturing in the U.S.

Read more »


M&A News for the Healthcare Industry Sector

By Daniel Sirvent | Sep 21, 2017

The report below provides a good overview of the 3rd Quarter M&A activity in the Healthcare Industry Sector. Q2 M&A activity for North American based Healthcare companies included 152 closed deals, according to data published by industry data tracker FactSet Research with an average disclosed transaction value of $142 million.

One of the largest deals of the quarter closed in May when Sawai Pharmaceutical Co. Ltd. acquired Upsher-Smith Laboratories, Inc. from ACOVA, Inc., for US$1.1 Billion in cash. Sawai Pharmaceutical Co. engages in the manufacture and sale of prescription pharmaceutical products that include cardiovascular drugs, antihyperlipidemic agents, diabetes, anticancer drugs and over-the-counter drugs. Upsher-Smith Laboratories manufactures generic pharmaceuticals.

Read more »


M&A News In The Food and Beverage Industry

By Terry Fick | Sep 19, 2017

The 3rd Quarter M&A report below provides you a good overview on activities in the Food and Beverage Industry Sector. M&A activity for North American based target companies in the Food and Beverage sector for Q2 2017 included 37 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $89 million.

One of the largest deals of the quarter closed in April when Tyson Foods, Inc. acquired  AdvancePierre Foods Holdings, Inc. for US$3.2 billion in cash, via tender offer. Based in Cincinnati, Ohio, AdvancePierre Foods Holdings produces and supplies sandwich products for foodservice and retail customers, schools, and convenience channels. The merger complements and expands existing business.

Farm and wholesale food prices continue to remain low, which is beneficial to consumers but limiting to retail profits.

Read more »


M&A News From The Engineering & Construction Industry

By Peter Heydenrych | Sep 13, 2017

The report below gives a good overview of the third quarter M&A activity in the Engineering and Construction Industry Sector. M&A activity for North American based target companies in the Engineering and Construction sector for Q2 2017 included 88 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $81 million.

One of the largest deals of the quarter closed in April when Tallgrass Energy Partners LP acquired an additional 24.99% minority stake in Rockies Express Pipeline LLC from Tallgrass Development for US$400 million in cash. Rockies Express Pipeline LLC provides water, sewer and pipeline construction services.

The Trump administration has promised to spend on improving the condition of the United States’ infrastructure. New large infrastructure projects will certainly benefit the industry and could spur a flurry of M&A as larger companies look to acquire smaller companies to increase capabilities.

Read more »


M&A News In The Consumer And Retail Industry

By Joe Sands | Sep 08, 2017

The report below gives a good overview of the third quarter M&A activity in the Consumer and Retail Industry Sector. M&A activity for North American based target companies in the Consumer and Retail sector for Q2 2017 included 118 closed deals, according to data published by industry data tracker FactSet. The average purchase price was $268 million.

The brick-and-mortar retail sector continues to suffer and shoppers buying habits shift toward online sales.

Retailers who rely on 0% financing deals to encourage big-ticket purchases are facing leaner profits or the possibility of lost sales as interest rates rise, according to The Wall Street Journal. Historically low interest rates since 2009 have enabled US retailers to effectively cover the financing costs for customers by paying a bank or finance company a few percentage points of a product’s purchase price upfront: a practice known as “buying down the rate to zero.” As the US economy improves, the Federal Reserve Bank has begun raising rates, most recently in March 2017.

Read more »


Q3 – 2017 Business Services | M&A

By Brad Purifoy | Sep 01, 2017

M&A activity for North American based target companies in the Business Services sector for Q2 2017 included 590 closed deals, according to data published by industry data tracker FactSet.

One of the largest middle market deals of the quarter was announced in April when Belgacom International Carrier Services SA, a subsidiary of Proximus SA, ultimately owned by the Government of Belgium, entered into a definitive agreement to acquire TeleSign Corp, a portfolio company of Summit Partners LP, Adams Street Partners LLC, March Capital Partners and Telstra Ventures, for US$230 million in cash with an undisclosed amount in contingent payout. TeleSign provides internet, mobile and cloud authentication and verification services. The company was founded in 2005 and is headquartered in Marina del Rey, CA.

Read more »


Why do potential acquisitions fail to close?

By David Sinyard | Aug 14, 2017

The termination of a purchase agreement entails significant costs for both the buyer and the seller. Research suggests that relational aspects are as vital as financial considerations.  The role of personal rapport between executives, as well as the importance of the bidder’s reputation, have major impact. First, private equity groups appear to consider the relational aspects of buying entrepreneurial and/or private businesses.  The importance of their reputation and of building rapport illustrate that non-financial aspects are important. Second, sellers should.. Read more »


What is a financial buyer?

By George Walden | Aug 11, 2017

Financial buyers include Private Equity Firms (PEGS), Venture Capital Firms, Family Investment Funds and Hedge Funds. These financials buyers are typically looking for a return on investment. They are not necessarily industry oriented. In fact, they are often industry agnostic.

They are usually looking for a stand-alone entity that they can add systems and build on. These financial engineers often use leverage to structure their transactions and place an emphasis on the company’s cash generating capabilities to service debt. This process is called a “Recapitalization”.
In a recapitalization the owner exchanges cash for equity conveyed based on a current market value of the company. The average hold is between 3 and 7 years and in a second offering the “second bite of the apple occurs”. It is not uncommon for the second bite to be as large as the first, but certainly this is not guaranteed.

Using a typical 80%/20% split let’s value the company at a 100 million dollars. A common Recapitalization structure would look something like this. The owner and buying group agree that the company could carry 50% of the structure as debt. This means capital in the transaction is 50M. The owner is asked to put in 10M to get 20% of the company. The financial buyer puts in 40M. The owner receives 90M for the market value of the company and retains 20% percent of the equity in the go forward of the company.

Transactions with financial buyers are more of a partnership rather than an 100% purchase. They often will buy a controlling interest in a company but minority acquisitions are not uncommon. Especially for high performing companies. Why would the owner of a performing company want a financial buyer? To remove risk, gain liquidity, receive financial underwriting and an advisory team.
Financial buyers can be very flexible in their acquisition strategy and structure.

Financial Buyers are not necessarily operators and often want to get behind a management team or the current owner to protect the operational viability of the company. Financial buyers provide more than money. There is usually an advisory role such as you would see with a board helping you to direct and build a vision for corporate growth. Financial buyers usually have a system in place to facilitate add-on acquisitions. After a platform acquisition they often buy additional companies to gain market share, mimicking a strategic buyer, with the goal of maximizing their return when they exit the investment.

I have heard many times over the year’s financial buyers ruin good operational companies. The evidence just doesn’t support this, in fact financial buyers often build phenomenal companies with their thoughtful approach to the numbers and systems. Most sellers should look harder at this type of buyer to understand how to raise the value of their company and implement what is important to attract the Financial buyer’s attention.